Receiver getting pcm signal instead of ac3

Hi,
I set up a little HTPC a few weeks ago and I'm slowly (very) getting my head around all the A/V formats and connections etc.
I'm using a HD4350 connected to my pioneer vsx-519 receiver via hdmi. I only watch HD flicks off the net, no BD player on my rig.
I play the movies on MPC 64bit using ac3filter (which works fine) but after reading up a bit I realized that if I bypass ac3filter, my receiver should be able to handle the audio decoding. I unchecked DTS and ac3 in ac3filter and loaded a DTS encoded flick and the DTS light turned on on my receiver (I wondered why it never did before, not realizing that it was receiving a decoded signal) and it sounds good and I'm happy and everythings cool. When I opened an ac3 encoded flick however, it didnt go that well. the dolby digital light( thats ac3 right?) didnt go on and it was outputting stereo saying it was receiving PCM. I tried a few movies with both formats and DTS worked while ac3 didn't. I tried unchecking everything in MPC's audio options window thinking something there might be decoding the signal in place of ac3filter be decoding but that didnt work.

Again, its not that I'm having problems with ac3filter, I'm just experimenting with some new found knowledge (legitimate no?  ), I dont know if having my receiver handle the decoding will have an effect on the sound quality but I know for sure that my old and tired pentium d can use all the help it can get.

So anyone have a tip for me as to why this is happening?

Thanks.